The Cost of TARP

As I’ve mentioned now and again, complaints about a “$700 billion bailout” that allegedly passed the congress last fall tend to ignore the fact that the actual fiscal cost of the TARP program is almost certain to be much lower than that. Today, via Planet Money we get the CBO’s latest estimate (PDF) of what that cost will be—$159 billion. Now of course $159 billion is a lot of money. But $541 billion is even more money, and that’s the difference between the latest estimate of the true cost and the “$700 billion” rhetoric that’s been flying around. Here’s the breakdown:

Note that a majority of the $159 billion in losses is accounted for by the auto industry bailout and the mortgage modification plan, the aspects of TARP that I think tended to attract the least criticism from the left. Of the $595 billion actually used on financial system bailouts, only $69 billion is actually being lost.